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Is Delaware Emerging Markets A (DEMAX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Non US - Equity fund? Well, Delaware Emerging Markets A (DEMAX - Free Report) would not be a good potential starting point right now. DEMAX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify DEMAX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

Delaware Investments is based in Philadelphia, PA, and is the manager of DEMAX. Delaware Emerging Markets A debuted in June of 1996. Since then, DEMAX has accumulated assets of about $461.71 million, according to the most recently available information. The fund's current manager, Liu-Er Chen, has been in charge of the fund since September of 2006.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 8.32%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 12.76%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, DEMAX's standard deviation comes in at 19.63%, compared to the category average of 9.59%. Looking at the past 5 years, the fund's standard deviation is 17.78% compared to the category average of 11.95%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. DEMAX lost 60.11% in the most recent bear market and underperformed comparable funds by 1.73%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Nevertheless, with a 5-year beta of 1.13, the fund is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -7.33, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, DEMAX is a load fund. It has an expense ratio of 1.68% compared to the category average of 1.29%. From a cost perspective, DEMAX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $100.

Bottom Line

Overall, Delaware Emerging Markets A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and higher fees, Delaware Emerging Markets A looks like a poor potential choice for investors right now.

Your research on the Non US - Equity segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.




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